LexM/S. E. D. SASOON & CO. LTD. BOMBAY versus THE C.I.T. BOMBAY CITY
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1084
MIS. E. D. SASOON & CO. LTD. BOMBAY
v.
THE C.I.T. BOMBAY CITY
AND VICE VERSA
August 29, 1972
(K. S. HEGDE, P. JAGANMOH~N REDDY AND H. R. KHANNA, JJ.]
Jncome·t~ Act 1922, S. 25(3)-Company taking over several busi-
nesses carried on by a firm which had paid tax under the Act of 1918-
Whet)'ler shares & securities business taken over-If one o} several 'busi-
nesses not taken over whether company can claim benefit under section
25(3) ..
The appellant company purchased the business of a partnership firm
towards the end of 1920. 1b.e firm had carried on b\$iness as Dankers,
commission agents, agents of join~ stock companies and dealers in sharel
and secwities, foreign exdlange etc., in and ounrlde India.
Pursuant to
. the agreement of purchase the appellant company took over the business
of the finn and also purchased
shares
and
securities
'WOrth
IU ..
1,93,79.521-3-1 at market value as on 31st December 1920, It further
purchased between 1st 1anuary 1921 to 31st January 1921 from the market
further shares and securities worth Rs. 4,28,05,627 in the ordinary courae
of his business. In the year of assessment 1949-SO the appellant company
disrontinued its business and claimed wmption on Rs. 33,40,057 under
s. 25(3). of the Income-tax Act 1922. This claim was rejected by the
In~tax. officer on .the ground ( 1) that in the year 1921 the assessee
claimed and obtained a deduction in respect of appreciation in shares and
IICCUritiea amou~ting to Rs. 9;26,708 and (2) it had dilcontinued one of
tbe business which the finn was doing namely dealing in s~b and llllaM.
'The Tribunal held that tbe business was assessed to tLx under the Ad
of 1918 but founu that the shares and slecwj,ties 'W'ere purchased by the
C'Ompany from the partnership firm not with the intentiod of dealing in
securities but as an investment. The High Court in reference held tha!
the company was a dealer in shares and ~curities immediately after it
took over from the firm. On a different question the High Coun gave its
answer against the assessee .. Both parties appealed to this Court with cer·
tmcates. The assessee did not press its appeal. In t·he appeal on behalt o{
'the Revenue it wa:s ~Jntended that the Tribunal had found that the share.
and securities business canied ori by the firm was non taken over by the
company and therefore the company was not carrying on the same buai-
ness as the firm with the result that 'it could not claim the
benefit or
i. 25(3). .
Dismissing the Revenue's appeal,
HELD: An assessee to obtain relief under s. 25(3) has to satisfy three
condiljbls. Firstly, that the businese, profession or vocatron must be orut
on which tax v.as at any time charged under the 1918 Act. Secondly, the
ca8e mU&t be ont where there has not been a succession after 1st April
1939 attracting the application of sub-s. ( 4). Thirdly, tlie business must be
.Jiscontinu,ed; such discontinuance amounting to a complete cessation of
business and n~t merely a succession or dbange of ownership. [1090CJ
In sub-section ( 3) there is a clear reference to the business and not
to the asSesSee and therefore the sub-se~ion applies even ifl the person
claiming the relief was not himself charged und-er the 1918 Act but his
predecessor-in-intere&t was so cbarg10<f. [1 090FJ
The. High Court had taken into consideration the asseSShlent' Ordec
for the years 192142 and 1922-23 dated the lOth January, .1923 for the
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1085
conclusion that the assessee company w
•bareS and stocks in respect of those ye":rstaxe~ o~ profits on dealin
.
yond doubt. that t~e company . WJs trading inw~cb II\ its view sbowef ~
year 1921 •mmcdmtc.ly nfter 11. took over fro arcs and securities for the
also there was sufficient matenal on the
m the firm. Even otherwi
t:>usiness of the firm which
inc,udcu dcal~or~ to hold that the cnt~~
wkcn over by the assessee company as a
. g In shares -:md stocks was
of st~ks a nu .shares were tmnsferrcd t~h"; ~nccm, that large holding5
there IS no ev1dence to show that for the y
SCS!Iee company aod that
also foJr subsequent years, the assessee compa~ars !920-:!I, 1921·22 and
On the other hand, the Statement of the ~
~as 7ot ~.,-~ling in ~bar\$.
assessee company purchased in the mJrkct duri~ar y di.scl~d th.:lt the
uary. 1921 nnd 3L~t
Dct)!mhcr
19~1
~hares g :e penod 1st Jan-
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